The Effects of Mortgage Foreclosures

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Every time a mortgage is foreclosed on, the value that the house will sell at will be less than if the mortgage hadn't been foreclosed. Find out how mortgage foreclosures diminish the value of banks' balance sheets with help from a portfolio manager in this free video on money management and personal finances.

Part of the Video Series: Investing & Money Management
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Video Transcript

Have you been reading in the newspapers about the folks that have lost their home due to mortgage foreclosure? Hi, this is Roger Groh at Groh Asset Management. It's become a large problem, not only in the United States, but world wide. Why? Because every time a loan is foreclosed on, probably the value of that house will sell at less than it would have if it hadn't been foreclosed. The reason? They need to get rid of it, and they need to get their cash back. The effect is though, to diminish the value of banks balance sheets, and as long as that happens, the banks are going to continually need new capital. Because they need new capital, they're not going to have cash to make loans, and if they don't have cash to make loans, then you can't buy cars, or more houses, or other big items like that, which leads us exactly what we are today, which is a cash strapped, loan heavy society. What can you do to avoid your own mortgage foreclosure? Well, there are many government and state programs now to help you work out your foreclosure issue with your lender. It is worth pursuing every angle that you can think of to keep your house. I'm Roger Groh with Groh Asset Management. Remember, you signed the loan, and you them that money.

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